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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FOREX
- The persistent rally in the USD Index is extending through the London close, with the greenback hitting new cycle highs of 112.866.
- The move has been exacerbated by the protracted weakness in GBP (making up around 12% of the USD Index) following the UK mini budget earlier today. A number of sell-side analysts have revised lower their near-term forecasts for currency, with Citi now expected GBP/USD to trade in a range of $1.05-1.10, raising the risk of a "confidence crisis" in the currency. Similarly, JP Morgan write that the UK rate market's reaction today is a sign of a "broader loss of confidence in the government's approach".
- Support for GBP/USD has proved ineffective on today's sell-off, with markets reaching new multi-decade lows of 1.0897. This narrows the gap with levels last seen in 1985 - with 1.0520 printed in February of that year.
- Friday's fiscal statement - marking the most significant wave of tax cuts in a generation - will cause considerable uncertainty for BoE rates policy, with SONIA futures falling sharply throughout the day and prompting BoE rate pricing to spike to an implied rate of near 5.50% for the August 2023 meeting.
- GBP/JPY also a notable mover given Thursday's BoJ intervention. The cross approaches support at 155.60 ahead of 155.17 - the 76.4% retracement for the March - June upleg.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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